Federal Reserve Alert! Governor Lisa D. Cook (in first speech as governor): 'inflation is too high, it must come down, and we will keep at it until the job is done.'
Source: https://www.federalreserve.gov/newsevents/speech/cook20221006a.htm
Other callouts in her speech:
Despite a large drop in the number of job openings in August, which may suggest that labor demand is moderating, there is still an unusually high 1.7 job openings per unemployed job seeker. Meanwhile, layoffs are near historical lows, and the quits rate is well above pre-pandemic levels even as it has moderated somewhat, indicating that workers still feel confident they can find another job.
On the price stability side of the Fed's mandate, inflation remains stubbornly and unacceptably high, and data over the past few months show that inflationary pressures remain broad based. My focus, therefore, is on bringing inflation back down to our 2 percent target. I am heartened to see measures of medium- to long-term inflation expectations falling in the surveys from the New York Fed and the University of Michigan. Although those declines may partly reflect falling gasoline prices, they provide some evidence that inflation expectations are well anchored.
The data on actual inflation, however, have showed a slower decline than I had anticipated, and I am seeking to better understand the reasons. I am focused on the lag between signs of easing price pressures and actual inflation coming down from its very high levels.
The widespread nature of the inflation pressures suggests that the overall economy is very tight, with constrained supply continuing to fall short of demand. The Fed cannot act directly on supply, but it can moderate demand by tightening monetary policy.
While there is heterogeneity across countries, high inflation is a global phenomenon. And financial conditions also have tightened abroad, as foreign central banks have raised policy rates. Some observers have raised concerns that central banks around the world, which are tightening policy to contain domestic inflation, may not be accounting for the cross-border spillovers of their policies. My role is to focus on the Fed's dual mandate to promote maximum employment and stable prices for the American people, which is a domestic mandate.
I believe that uncertain times require a risk-management approach to policy-settingโlooking not just at the expected outcomes, but also considering the most salient risks in setting the policy stance. In the current situation, with risks to inflation forecasts skewed to the upside, I believe policy judgments must be based on whether and when we see inflation actually falling in the data, rather than just in forecasts. Although most forecasts see considerable progress on inflation in coming years, it is important to consider whether inflation dynamics may have changed in a persistent way, making our forecasts even more uncertain.
